Good and helpful post - thank you @Fence.
I'm bumping up against this in my current playthrough. Solution Vital. Lame there's no other solution than to walk up shooting guns. I even tried luring the bandits into all the nearby primal nests, get two groups of enemies fighting each other, rescue the guy while they're busy, classic "clean hands" solution. I can (barely) get the two groups together both attacking me but somehow they seem completely unaware of each others' existence.

Thanks for the reply. What you are describing is a toggle, which is what I do not want. I want to hold the button down to remain crouched, then lift my finger off the button to stand up again. This is "hold to crouch", a traditional format for mouse and keyboard first person PC games. I am a PC player

I like to eliminate clutter on my screen, and I like to remove "helper UI" stuff.
At a glance, I don't need or want:
The compass
Quest markers in the game world
The current mission objective window
Floating "red flags" over enemies
Enemy names
Enemy HP bars
Flying numbers when I shoot stuff
My ammo counter
ZXCF ability activation icons
Companion health bars
Other control reminders
My health and stamina bars if I haven't been wounded/tired lately (let them "fade" when not in use)
All of this just gets between me and the game world. There is probably other stuff I'd like to turn off too. I hope to find toggles for most UI elements in the options menu.
Thanks for reading.

Does anybody know - is it possible to swap in custom art for the rest of the party, not just your main character?
I can't stand the fact that Calisca faces 90° to the side when every other portrait ever is a 3/4 or straight ahead view.
I found a painting of a similar-looking woman and I want to substitute it in.
It would also be nice just to have the option for other NPCs in case I would prefer different portraits for them as well. (Not that the art in the game is bad or anything; most of it looks great.)
Please let me know if this is possible. Thanks.

Yeah, if they wanted to pacify "realists", they could certainly make up a magic genie box or whatnot. Doesn't matter to me either way.
Can't really trump a human GM.
Haha, yeah. I remember discovering encumbrance rules after YEARS of playing AD&D 1st Edition. Hey guys, there are rules for this, I guess we should start keeping track. There was so much stupid BS in that DM's Guide that never saw the light of day in any of my campaigns. I think we tried using it for a few sessions and then just forgot about it. Not really fun.
On the other hand, just reducing the value of most items (except for a few precious pieces of treasure) to 0 would greatly reduce the incentive to hoard them, without necessarily sacrificing details/items that add to the setting/resource gameplay. I don't recall inventories full of Quarterstaffs, for instance.
Honestly, I'm not a fan of "color" loot. Why the hell can I pick up a fork in Skyrim. To me it is all just clutter confusing the issue in an already bloated and horrible inventory system. If you want there to be a fork on the table, that's the art department's job. Draw a fork on the table. I can see it, I know it's there, it has nothing to do with the game, I don't need to be able to put it in my pocket. I don't know. I guess I'm as guilty as anyone of rearranging my home decor in Fallout 3. In an IE type game though, less is more where inventory is concerned. My 2gp.

I haven't played the beta, but want to go on record. I like being able to control my characters' speed. Sprinting like a group of escaped maniacs everywhere is irritating. It feels wrong in town, especially indoors, and it also ruins the atmosphere in spooky dungeons and so forth. I hope that 'stealth mode' or whatever doubles as a reasonable walking speed.
Apropos of nothing, Wasteland 2 had a bit of a flap about this and it was ultimately decided to put a walk toggle in. It does nothing but slow the characters down. I for one am quite happy about that

I suppose it's a question of how "organic" or natural it feels to the gameplay. The resting/spells parallel is a good one, because like a finite inventory, it provides periodic downtime and reassessment of my party's readiness. When I go through a dungeon, it makes sense to me to pace myself, keep track of my hit points and how many spells I have left. These things matter; they're the basic resources I "spend" and must replenish to progress. They matter all the time.
A very limited inventory is also very natural and organic. If I can only carry 2 things, it comes up a lot and is feels like a normal part of the gameplay, even part of the story. It matters all the time. Resident Evil comes to mind as a perfect example of a small inventory done right.
But with a traditional, IE-style inventory, inventory space isn't something I really keep tabs on until I have to, because most of the time it doesn't matter. I can go through a whole dungeon without thinking about it at all, then suddenly 1/3 of the way through the next dungeon, boom! I come to a complete halt. I might be looting a dragon's horde, or maybe I just found a plain copper ring lying on a table (usually it's the latter case, something totally insignificant that hits the limit). Now I have to go through my personal warehouse of 500 things and figure it out, regardless of the drama of the current situation. And then once I do it, I don't have to think about it again for another 5 hours of play, and then it hits again and stops the show again. It's the disjointed, arbitrary nature of it that feels so wrong to me.
The stash type inventory is a good solution to the problem in my opinion. It extends that feeling of not having to worry about it and makes it so you never have to worry about it. Unrealistic? Of course, but you already know my stance on realism vs. gameplay.
And I understand that some people enjoy that "realism" or just the thrill of balancing numbers. I've just gotten to the point in my role-playing life where it's not what I'm interested in any more. You should see the P&P games I play ... we say things like, "I go buy some armor." No one cares how many gold pieces were spent. There isn't a well-erased part on my character sheet with my current gp, sp, cp. The GM just says, OK, you have enough money to do that, or OK, but that will mean you're almost broke. That's sufficient for us to tell the story, and that's all I really care about even in CRPGs. Worrying about how to fit those 3 big boxes on a cart is a problem best left to real life. In a game, it's a detail I'd rather gloss over, just like I gloss over boring stuff like going to the bathroom or dealing with mosquito bites.

Good post db, and I see that point of view. That works for players who are inclined to visit the shop frequently anyway, but to me going to sell is a chore. If I forget to do my chore I am grounded and not allowed to have the fun.
I still believe that inventory management is better as all or nothing. When space is unlimited, I don't have to worry about it. When space is small and limited, I have to worry about it, but in a fun way that is a constant challenge, a basic part of gameplay. A huge but limited inventory encourages me to not think about it that much and Hoover everything in sight, and then periodically hits me over the head and cries "Stop! You must go see the merchant before venturing forth!"; no matter where I am, the game comes screeching to a halt.
My (least) favorite example of this occurred in Dragon Age: Origins. Colossal inventory space, but still finite. So I was on this long story line that took me deep, deep into these ruins underneath the dwarven city. I had taken hours getting there and felt a long way from civilization. My dungeon delving was going great and I had a lot of scary fights. Then suddenly my loot tank filled up and "Ping!" I had to stop. I considered going picking through my whole (huge goddamn) inventory and deciding what I could discard and what I could keep, but decided it would be too wasteful and tedious. I ended up simply turning around and walking back through the ruins, devoid of any sense of mystery or adventure since I'd already cleared out all the encounters, no surprises, no tension, no fun. I just walked back to the city, sold 2/3 of the **** I was carrying, and just walked back through the ruins again, all the joy and magic of the experience completely drained away. The ruins of the city looked sturdy and new compared to the ruins of my gameplay experience.
After that I promptly installed a mod that maxed out my inventory space, forgot all about it, and went back to having fun. This is the purpose of the stash.

The developers should. They should have an idea in mind of the kind of experience they're trying to create, and then design to encourage that experience.
It's all very well for devs to just throw a bunch of systems out there and let the player do whatever they want, but in many cases this creates situations where the most mechanically rewarding behavior is also the most boring. Players who don't like boring things end up feeling cheated, and players who want the reward at any cost end up "grinding" boring behavior to get the cookie.
If you like to grind and do other boring things, good for you, go ahead and do them. You can still kill everything in sight in PoE if that's your taste. But if you're only doing it for the cookie, just go buy a box of cookies and be done with it. You don't have the "right" to a cookie just because you like a certain type of behavior. The devs can attach cookies wherever they choose to, and not attach them where they choose not to, in order to encourage an experience consistent with their intentions. Note that every xp-based game ever already does this.
It's perfectly OK if you don't want to experience a game the way they encourage you to, but it's on you to find your own fun then. Not their responsibility to make sure everyone loves it, no matter how retarded their preferences.

I think I'll love the idea now, and then completely forget about it in 4 months because it doesn't bother me any more. That's much better than being constantly annoyed by it.
Micro inventory management can be great in a survival type game, but in a context like this, there's just no reason for it - it doesn't add anything. It doesn't make for interesting choices. All it does is encourage play where you assiduously make periodic trips to a merchant to ensure that you have plenty of free space in your backpack at all times. If you neglect to do so, you get that annoying moment where you say damn, I forgot to do some of the busywork. It's extra schlepping, nothing more.
I think the ideal here is for the thrill of an interesting decision ... I can't carry both the idol and the whip, so which do I choose? I get that and why it's fun, but in practice (again, in this type of game), that does not happen. You're already carrying 400 different items across all your characters, and once you hit the limit and pick up item #401, you have to sift through to find the most insignificant item among all your insignificant items - or not bother and just throw away the first insignificant item you see.
This is one of those cases where the extremes are more desirable than the middle ground. If each character could only carry 3 things period, that would be great - each new find really would be a decision. On the other hand, when tracking every leaf and trinket among 1,000 bits of loot is eliminated (the stash), that is also great. The middle ground of having tons of crap to organize and making it a big problem is not so great.
My 2gp
To turn this on its head, I'd like to see an explanation of what the traditional method of "tons of crap, but with an arbitrary limit" adds to gameplay from the point of view of its proponents. (I'm sure there are already a million posts on this subject, so feel free to just hit me with a link.)